The increasingly large global industry of legalised cannabis creates a foundation for opportunity where new gaps are appearing for companies and individuals to exploit market demands. While we have covered this sector in some detail on our blog in the past, there is always new information to share and details that emerge with new legislation that make opportunities that seemed vague a few months ago extremely realistic and exhibiting exciting potential. Latin America is an example of the fast-paced environment that defines legalised cannabis, with countries recognised the world over such as Uruguay, where pioneering relaxation of cannabis legislation set the groundwork for global development in the industry. One such nation following this example is Ecuador, where there is a promising landscape for the commercialisation of legal cannabis and its by-products, and today we will take a specific focus on the cannabis licenses on offer there, and why they could be a good investment for you.
The Ecuadorian legalised cannabis industry is extremely dynamic, demonstrated in recent years where development has been constant following the approval of new regulations in 2020. These regulations will see the introduction of seven licenses allowing different types of cannabis cultivation, please find these outlined below:
Importation and commercialisation of hemp seeds and cuttings (including seeds for industrial use)
Sowing and production of hemp seeds and cuttings (including seeds for industrial use)
Industrial hemp cultivation
Hemp processing and production of hemp derivatives
Plant breeding and/or germplasm banks, and research
Acquisition of derivatives and/or biomass or hemp flower (including biomass for industrial use) for export
It is clear that in less than a year, the barriers to cannabis access have been largely removed. Just by reading the list it is evident that industrial cannabis in the form of hemp is encouraged through these licenses, and if you are involved in this sector, perhaps investment in Ecuador could be the answer to sustainable hemp cultivation, as it is both legal and viable. Not only this, but it is possible to hold more than one license at a time, providing multiple avenues for investment, and with more available combinations with more licenses, the potential returns on any investments increase exponentially!
The above point is certainly exciting; however, it is possibly a bit daunting too. Holding multiple licenses could leave room for confusion depending on which operational stages your business intends to take care of, and this is where the Undersecretary of Agricultural Production in Ecuador comes in. Luque stated that companies that want to be involved in every step of cannabis production from growing to exporting can seek License 3 and have no need for any others (unless the hemp is for humans or animals in which case License 5 is a must-have). This is an interesting idea as it simplifies the process so long as you can prove your business plan and in essence make it clear why you need such broad permission in a relatively young market such as this.
A significant factor for any investor is that of costs involved in projects and the potential returns, allowing you to weigh up investments for their viability in the near and long-term future. You will find below a cost breakdown of each license on offer in Ecuador:
License 1: US$1000
License 2: US$1000
License 3: US$1500-US$3000 (depending on land area you intend to make use of)
License 4: US$375-US$875 (depending on land area you intend to make use of)
License 5: US$3000
License 6: US$1000
License 7: US$40.000
This is indeed a wide range of prices, and there are renewal costs, yet all of these are in line with what could be expected for the variety of licenses and what is permitted under them. In terms of price compared to return, Luque has said that every ten thousand hectares of land cultivated for industrial hemp in Ecuador could return upwards of US$300 million, demonstrating potential on a large scale. However, if you are interested in the more personal scale, the hemp industry in Ecuador is growing, and so demand from local and regional populations is rising, and with around 110,000 consumers in the nation at the moment, there is still a lot of room for further growth, especially with industrial hemp which evidently extends beyond personal consumption of cannabis-derived products.
If you feel this could be the right move for your company, get in touch with us today. Our team at Creimerman would gladly assist you with your application, helping you to receive your licenses in only three months, making the process as fast as it is rewarding.